The lockdowns have been lifted, summer is nearing full swing, and house prices are on the up. Rents have continued to drop somewhat in some London locations, but tenant registrations are up and the return of overseas students coupled with the reopening of shops, bars and restaurants should soon spell the start of a strong return to pre-pandemic rental figures.
House price indexes for May 2021 show that London’s average property prices are now 3.1% higher than they were a year ago, and the market witnessed an almost 20% decrease in the number of sellers who were willing to negotiate their asking price. There has also been a significant 40% increase in new London property listings, which is helping to meet strong buyer demand while keeping house prices relatively stable.
Portico figures demonstrate a strong start to the London summer property market
At Portico we have completed twice the number of sales over the last six months compared to the same period of the previous year. Naturally, this takes into consideration that the market all-but stood still for three months during the spring of 2020 as a result of the restrictions imposed by the lockdowns. It also reflects the clear benefits that were made available to buyers throughout the Stamp Duty Holiday period.
Our London sales offices agreed more sales in May 2021 than in May 2020, indicating that, despite the Stamp Duty Holiday coming to a close, the market’s appetite for property purchasing remains high.
London sales prices achieved
Across all sales agreed in May 2021, Portico achieved an average of 98.1% of asking prices across all of our offices. This figure increased to 99.6% of asking prices achieved throughout our six east London offices.
The May average is only a slight reduction on the average agreed sales price relative to asking price when averaged across the year so far. Between January 2021 and April 2021, Portico achieved average sales of over 99% of asking prices.
Over the last two months, 49% of sales have been agreed upon at 100% or more of the asking price.
According to one of our Regional Directors, Ed Lugg (MARLA, MNAEA), the type of buyers has been varied. “All buyers across all property classes and areas of London have sought to capitalise on the savings made available as a result of the Stamp Duty Holiday,” he said. “It is not just first-time buyers or upsizers hoping to make the most of the incentive.”
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Shifting buyer priorities as the Stamp Duty Holiday ends
The Stamp Duty Holiday ends completely on 30th September 2021. From 1st July 2021, and for the following three months thereafter, buyers will pay no Stamp Duty on the first £250,000 they spend on purchasing a home. At Portico, we anticipate that first-time buyers, new entrants into the buy-to-let market, and investor clients will all continue to take advantage of the savings during this time.
While the reductions in overall transaction costs will be slightly less than buyers have recently been enjoying, there are still some significant discounts to be had. Only once this period ends will we see any notable change in buyer behaviours, yet the lifting of the lockdowns will also shake up the market and potentially cause more people to make their desired moves before the winter draws back in.
Landlord instructions are up
Over the last 12 months, landlord instructions are up 12% from the previous year, and property valuations have also increased by 28% year-on-year. Landlords are cautiously considering a return to growth strategy and portfolio expansion as the lockdowns have lifted. The number of landlords seeking to take out Rent Guarantee Insurance continues to increase in line with the extension of the furlough scheme. In order to increase our Landlord’s financial security, we offer a Rent Guarantee policy with zero excess, which can pay any rent not paid by a tenant for up to 15 months. Get in touch with us on 020 7099 4000 to find out more.
The cover also continues beyond vacant possession by up to two months, during which time a landlord could expect to receive 75% of the previously agreed rent. The policy can also cover all legal expenses incurred as part of the possession recovery process.
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Tenant registrations are also increasing
Tenant registration numbers have been steadily increasing since the beginning of the year, with a 22% increase in new tenants registered in May 2021 when compared to January 2021. As restrictions have eased and the country has emerged from lockdowns, we have noticed that as tenants have become able to move more freely, the demand for rental properties has increased.
Portico’s East London offices are experiencing significant letting demand, with approximately 27 applicants currently coming through per property, equal to the stats of the previous year.
Meanwhile, the sales demand figures across these offices has approximately doubled year-on-year, with twice the number of buyers currently registered per listed property than that of May 2020.
“Those who have been staying put during lockdown are now actively looking, hence an increase in tenants. Whether it be a group of sharers looking to live together, couples moving in together, or tenants in general wanting more space (to accommodate working from home), and/or outdoor spaces, tenants are on the move,” said Portico Regional Director, Vatche Cherchian (FARLA, MNAEA).
Shifting tenant priorities
Tenant priorities are continuing to shift as the work-from-home culture is adopted longer-term by more and more businesses. This has resulted in renters looking for more space and flexible use of their rental properties, including designated work-from-home spaces such as spare bedrooms or studies, as well as an increased demand for properties with outdoor space.
At Portico, we are seeing a distinct shift in locational trends as the country exits lockdown, too. As Vatche Cherchian outlines, “Following the first lockdown, there was a distinct decrease in demand for rental properties in more central locations, but this has changed again in the last few months - young professionals are returning to central locations in a bid to be nearer to shops, bars and restaurants now that they have all begun to reopen. We have also started to see demand increasing from students, including those from overseas - this was almost non-existent in 2020 and will no doubt help to push rental prices back up to pre-pandemic levels in central London locations.”
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Are you looking to buy, rent or sell in London? We can help!
With the restrictions of lockdowns continuing to ease and businesses opening back up on a large scale, the market is set for a strong summer. Consumer priorities may have shifted, but buyers and tenants alike are actively looking to make moves over the coming months, and overall sales and rental figures should continue to climb.
If you’re looking to buy property in London, sell your London property, or rent a property in London, we can help. Click on the respective links, or give us a call on 020 7099 4000 to find out more.
You can also get a free online property valuation in 60 seconds through our online form, or check out our online rent calculator to see how much your property could earn in rent.